LexCEMENT MARKETING CO. OF INDIA LTD. versus ASSTT. COMMISSIONER OF SALES-TAX, INDORE &ORS.
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
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1098
CEMENT MARKE'IJNG CO. OF INDIA LTD.
v.
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ASSTT. COMMISSIONER OF SALES-TAX, INDORE &ORS.
October 30, 1979
[P. N. BHAGWATI. AND R. S. PATHAK, JJ..]
Mad/1ya Pradesh General Sales Tax Act 1958, Sl(o) &: Central Sales Tax
Act 1956 S2(h)-'Sale Price'-Sa/e of cement under Cement Control Order·-
a1nount of 'freight'-whether part of 'sale price' includibl-e in taxable turnoveT
of the asseSBee.
·
Madhya Pradesh General Sales Tax Act 1958, S43 & Central S•les Tax
Act 1956, S9(2)-'false' return-Bona fide belief of assessee that the amount
of 'freight' did not form part of the 'sale price' and not includible in the
taxable turnover-penalty whether leviable.
The assessee (appellant) effected certain transactions of sale of cement in
accordance with the provisions of the Cement Control Order.
The amount of
freight which was included in the 'free on rail destination railway station'
price and which was paid by the purchaser was deducted from the price shoWJ>
in the invoices sent to the purchasers.
The assessee proceeding on tlle basis
that the amount of freight did not form part of the sale price and was not
includible in the taxable turnover did not show it in the returns submitted by
it.
The Assistant Commissioner of Sales Tax took the view that having regard
to the provisions of the Cement Control Order, the amount of freight formed
part of the sale price and was includible in the taxable turnov<er of the assessee,
and passed two orders of assessment, one under the Central Sales· Tax Act,
1956 and the other under the Madhya Pradesh General Sales Tax Act, 1958,
including the amount of freight in the taxable tumover of the asseasce and
levying tax upon it and ftlso ·imposing heavy penalty on the assessee on the-
ground that the assessee had failed tOI disclose in its returns the
amount of
freight as forming part of the taxable turnover.
In appeals to this Court on the questions of : (I) inclusion of the amount
of freight in the taxable turnover of the assessee and (2) imposition of penalty
for not showing the amount of freight as forming part of the taxable turnover
in the returns.
HELD : 1. (i) The amount of freight formed part of the sale
p.rice-
within the ineaning of the first part of the definition of that term in Section
2(o) of the Madhya Pradesh General Sales Tax Act, 1958 and Sectioe 2{h)
of the Central Sales Tax Act, 1956' and was rightly included in the taxable
turnover of the assessee. [l!OIEJ
(ii) In Hindustan Sugar Mills
v.
State of Rajasthan [1979] I SCR 276
this C.ourt held that by reason of the provisions of the Cement Control Order,
1967, which governed the transactions of sale of cement entered into- by the-
asoessee the amount of freight formed part of the sale price within the rneanin~
)
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CEMENT MARKETING CO. V. SALES TAX
1099
of the firs~ part of the definition of that term contained in Section 2(p) of
tho Rajasthan Sties Tax Act. 1954 and Section 2(h) of the Central So.les Tai<
Act, 1956 and was includ,ible in the taxable turnover of the assessee.
The
said decision n1ust equally apply under the Madhya .Pradesh General Sales Tax
Act, 195~, a~ the definition of 'sale price' in Section 2(o) of 1he Madhya Pra-
desh General Sales Tax Act, 1958 is materially in the same tern1s as Section
2(pl of the Rajasthan Sales Tax Act, 1954. [l!OlC-E]
2(i) The A.55istant Commissioner of Sales Tax was not justified in im-
posing p1enalty on the assessee under Section 43 of the Madhya Pradesh General
Sales Tax Act, 1958 and section 9 sub-section (2) of the Central Sales Tax
Act of 1956 as the assessee could not be said to have filed 'false' returns when
it did not include the amount of freight in the taxable turnover shown in the
returns. [1103C, BJ
(ii) Section 43 of the Madhya Pradesh General Sales Tax Act, 1958 pro-
- viciing for imposition of penalty requires that the assessee should have filed a
'faJ.5.e' return and a return cannot be said to be 'false' unless there is an ele~
ment of deliberateness in it.
The· Section being penal in character, unless the
filing of an inaccurate return is accompanied by a guilty mind,
the section
cannot be invoked for imposing penalty. [1102D, 1102H]
(iii) Where the assessee does not include a particular item in the taxable
turnover under a bonafide belief that he is not liable so to iru:lude it, it would
not be right· to condemn the return as a 'false: return inviting impositiExcerpt shown. Read the full judgment & AI analysis in Lexace.